Finding a way through the EU

13 September 2010
14 September 2010 | Lindsay Clark 

EU procurement rules are frustrating for buyers as an SM blog recently showed. Lindsay Clark asks what scope there is for improving processes

If public sector procurement has a bête noir, it must be the European Union (EU) tendering rules. Before the UK election, business leaders called them “arcane”, offering the Conservatives a fillip in portraying the Labour government as wasteful.

Since the coalition was elected, UK education secretary Michael Gove suggested the EU tendering process was to blame for delays associated with the £55 billion Building Schools for the Future programme, which he then axed.

Feelings run high on the topic, as a recent blog on the SM website shows. Dave Henshall, president of consultancy Purchasing Practice, posed the question “Should government abandon the OJEU?” and two dozen replies rapidly followed.

Many condemned the rules, designed to ensure fairness and
openness in EU public sector tendering, because they view them as bureaucratic and limiting. “This whole system is dire and counterproductive,” says business travel expert and former Hogg Robinson managing director, Mike Platt. “It costs too much money, restricts ability to bid productively, undermines confidentiality and usually provides the wrong solution. A recipe for disaster.”

Yet although they provoke ire, EU procurement rules, such as Directives 2004/17/EC, 2004/18/EC, may be difficult to remove. The coalition government has no policy to withdraw from the EU, which may be necessary to avoid the tendering regulations.

David Hansom, a procurement specialist at legal firm Eversheds, says: “The scope to opt out now, from a legal perspective, is limited. It would take a full-scale review of the UK’s relationship with the EU.”

This could include attempting to renegotiate the treaty which is the foundation of the EU and ensures free movement of people, goods and services, he says.

While so-called ‘opt outs’ can be agreed during the negotiation stage of a Directive, it is not possible to opt out of individual provisions retrospectively.

Meanwhile, government procurement professionals are always refining techniques to speed up and simplify the tendering process, says Chris Allison, director of East Midlands Improvement and Efficiency Partnership. Better use of framework agreements are improving the process. “They have been a boon as far as local authorities are concerned, with them amalgamating [demand] and getting a good deal,” he says.

In a follow-up blog, Henshall acknowledges EU rules may be here to stay, but refuses to concede that there is little we can do about them. Aligning governance within public buying should make the process easier, he says. “There needs to be a coordinated viewpoint across the public sector buying organisations of the strategic purpose they are there to fulfil.” This already happens in the private sector, he adds.

Creating consistent processes across diverse and disparate government departments has proved a problem in the past. Maybe now, with extreme budget pressures, there could be the political will to do it. [Public sector]

Although a review of procurement law by the European Commission is due, case law suggests there is an appetite for more regulation, not less. “There’s a possibility there will be a review [but] whether that will lead to fundamental simplification in the short term, I think is unlikely,” says Hansom.

The Public Procurement Remedies Directives, introduced in December last year, offers losing bidders greater scope to challenge contract awards in the public sector. Better understanding of these rules among suppliers, and fewer opportunities for them in the market, means procurement should be on their toes to avoid falling foul of a challenge. There is scope for the application of the rules to be improved, says Hansom. Used only for complex contracts, where the government authority does not define the exact solution, the competitive dialogue process can lead to detailed discussion with at least three bidders.

Hansom adds: “It can generate value for money but does not need to take 18 months to two years. It can be punchy.”

The Treasury is reviewing the effectiveness of competitive dialogue.

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